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HONG KONG – Asian stock markets fell for a second day Tuesday as uncertainty over the economic toll of swine flu inspired more caution among investors.

The disease, which broke out in Mexico just days ago, has spread to Europe and testing of suspected cases was underway in Asian countries, including South Korea and New Zealand. As governments everywhere toughened their precautions, the World Health Organization raised its global alert level in a move that could lead to more trade and travel restrictions.

While the disease has been relatively contained so far — with all 150 suspected deaths and most of the some 2,000 infections in Mexico — investors seemed loath to take on more risk and pocketed gains from the market's recent rally. Drug makers jumped while airlines and other travel-industry companies took another hit.

"Sentiment has improved a lot since March, but it's still in a fragile state at this point," said Kelvin Lau, regional economist at Standard Chartered in Hong Kong. "Many people are still pessimistic, and given the swine flu, sentiment could see another dip."

Swine flu wasn't the only distraction for investors, already uneasy about the results of the U.S. government's stress tests to gauge the health of the largest 19 banks. The reports are set for release Monday, though Bank of America and Citigroup have been told by regulators the two will likely need to raise more capital, according to a Wall Street Journal report.